Life Partners Holdings, Inc., Brian D. Pardo, R. Scott Peden, and ...

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through 145.THIRD CLAIM FOR RELIEFViolations of the Reporting Provisions of the Exchange Act (Section 13(a) and Rules 12b-20, 13a-1 and 13a-13) [15 U.S.C. § 78m(a) and 17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.12a-13] [against Defendant Life Partners] 161. The Commission realleges and incorporates by reference Paragraphs 1162. Defendants Life Partners, Pardo, Peden and Martin, in public filings with theCommission from January 2007 through November 2011, misrepresented, failed to disclose,and/or made misleading omissions regarding: (i) a material risk to the Company’s business, (ii) amaterial trend impacting the Company’s revenues, (iii) the Company’s revenue recognitionpolicies, and (iv) the Company’s net income.163. By engaging in the foregoing misconduct, Life Partners, whose securities areregistered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78]), failed to file annual andquarterly reports (on Forms 10-K, 10-KSB, 10-Q and 10-QSB) with the Commission that weretrue and correct, and failed to include material information in its required statements and reportsas was necessary to make the statements made, in light of the circumstances under which theywere made, not misleading.164. By reason of the foregoing, Life Partners violated, and unless enjoined, willcontinue to violate, Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13].165. Pardo, Peden and Martin knowingly or with severe recklessness gave substantialassistance to Life Partners in its violations of Section 13(a) of the Exchange Act and ExchangeAct Rules 12b-20, 13a-1 and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13].SEC v. Life Partners Holding, Inc., et al. Page 50Complaint
166. By reason of the foregoing, Pardo, Peden and Martin aided and abetted LifePartners’ violations, and unless restrained and enjoined will continue to aid and abet suchviolations, of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and Rules 12b-20, 13a-1,and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13].FOURTH CLAIM FOR RELIEFViolation of the Books and Records and Internal Control Provisions of the Exchange Act (Sections 13(b)(2)(A) and 13(b)(2)(B)) [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)] [against Defendant Life Partners] through 145.167. The Commission realleges and incorporates by reference Paragraphs 1168. By engaging in the foregoing misconduct, from January 2007 through November2011, Life Partners, whose securities are registered pursuant to Section 12 of the Exchange Act[15 U.S.C. § 78l]: Failed to make and keep books, records, and accounts, which, in reasonable detail,accurately and fairly reflected the transactions and dispositions of its assets; and Failed to devise and maintain a system of internal controls sufficient to providereasonable assurances that: (i) transactions were recorded as necessary to permitpreparation of financial statements in conformity with GAAP or any other criteriaapplicable to such statements, and (ii) to maintain accountability of assets.169. By engaging in the foregoing misconduct, Life Partners violated, and unlessenjoined, will continue to violate, Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [15U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)].170. Pardo, Peden, and Martin knowingly or with severe recklessness providedsubstantial assistance to Life Partners in its failure to make and keep books, records, andaccounts, which, in reasonable detail, accurately and fairly reflected the transactions anddispositions of the assets of Life Partners.SEC v. Life Partners Holding, Inc., et al. Page 51Complaint
Page 1: UNITED STATES DISTRICT COURT FOR TH
Page 6 and 7: spreadsheet of the 300 “most rece
Page 9 and 10: 24. R. Scott Peden, age 47, has ser
Page 11: 32. Pardo hired Cassidy without con
Page 14 and 15: insurance. In fact, contrary to the
Page 16 and 17: E. Defendants Knew that Cassidy’s
Page 18 and 19: oker life settlement interests were
Page 20 and 21: 57. Contrary to Life Partners’ mi
Page 22 and 23: THE ACCOUNTING FRAUD 64. In fiscal
Page 24 and 25: agreement to sell the policy for an
Page 26 and 27: 76. Under GAAP, revenue can be reco
Page 28 and 29: therefore misleading. Based on the
Page 30 and 31: 88. Pardo, Peden, and Martin were a
Page 32 and 33: E. Life Partners Backdated Certain
Page 34 and 35: though all three of its internal cr
Page 36 and 37: Company made it a practice to keep
Page 38 and 39: 118. In a letter to the Company dat
Page 40 and 41: that affects our assumptions about
Page 42 and 43: ecommended that “[a] formal analy
Page 44 and 45: 136. Life Partners’ 2011 Form 10-
Page 46 and 47: 11/3/2008 $36.67 2,866 $105,096.221
Page 48 and 49: through 145.SECOND CLAIM FOR RELIEF
Page 52 and 53: 171. By reason of the foregoing, Pa
Page 54 and 55: through 145.SEVENTH CLAIM FOR RELIE
Page 56 and 57: e) ordering Defendants to disgorge

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